Advanced Advertising: VOD Ads Must Remove 'Friction' to Hit Scale

New York -- About 30 million U.S. cable homes are currently equipped to view dynamically inserted ads in free video-on-demand -- but programmers and operators still have work to do to really grease the skids before it's a sizable category.

“We’re trying to get rid of the friction in the system,” said Channing Dawson, senior advisor to Scripps Networks Interactive (pictured, above). “But it will take a year or two to get that frictionless. It is going to take another 18 months to figure out what we want to do in this space.”

Scripps announced an agreement this week with Clearleap, which is providing quick-turnaround processing of 100-plus hours of the programmer’s VOD content and IP-based distribution. The goal for Scripps is to get credit under the Nielsen C3 program, which counts on-demand views in a 75-hour window after initial broadcast.

With the evolution of VOD and TV Everywhere, “we realized we needed a more robust form of transport,” Dawson said.

Whereas it used to take Scripps as long as six weeks to process and distribute VOD assets, now it’s been reduced to a few hours, according to Dawson. But Scripps and the industry at large must still develop workflow processes and standards for VOD ads to reach critical mass.

“We have to slither before we crawl,” Dawson said.

Some of the technical hurdles have been cleared. Avail-TVN is currently providing quick-turn processing and distribution of VOD with the Nielsen C3 watermarks for more than 50 networks, for distribution to 270 operators, according to vice president of product management Joni Kinsley.

“I feel like we’re past this stage of inertia, and now it’s about how quickly it will scale,” she said. “We have seen rapid adoption from the content-provider community” of Nielsen C3.

But Kinsley agreed that the industry requires a metadata standard for video that transcends linear, VOD and online. She pointed to the Entertainment Identifier Registry (EIDR) project, which aims to provide just that. EIDR is backed by Comcast, TWC, Cox Communications, Charter Communications, CableLabs, movie studios and others.

Echoing the need for metadata conformity, Bob Van Orden, Clearleap’s senior vice president of corporate and business development, noted that each of the four initial pay-TV operators his company is working with to deliver VOD for dynamic ad insertion uses a different metadata format.

“It’s still very complex,” he said.

The 30 million VOD ad-ready households are represented by Comcast and Time Warner Cable, which say they have deployed the capability to execute dynamic ad insertion on VOD across their respective footprints. That’s a key starting point for the industry, because “advertisers think in terms of a national footprint, not market deployments,” said Alan Hoff, vice president of strategic marketing at SeaChange International.

Initially, VOD advertising may be largely sold by cable operators locally rather than at a national level by programmers, Kinsley said.

Today VOD ad rates are in the $10 to $30 cost per thousand (CPM) impressions range, according to Dawson. “But if you have the right product and it’s addressable, who knows where it goes?” he added. "It’s not impossible to get really outrageous CPMs," citing as an example a health-information website that attains a $2,500 CPM for certain targeted ads.

“Some MSOs are already bringing those together,” he said, such as Comcast’s X1 service that melds Internet content and services with traditional cable TV. IP-based set-tops would make it easier for operators to open up VOD inventory to third-party ad servers, as is to the Internet world.

The panel was moderated by Multichannel News editor-in-chief Mark Robichaux.